Congressional Democrats have introduced a bill that would expand the Federal Reserve's mandate to include addressing racial inequality, according to the Washington Post. Specifically the bill, the Federal Reserve Racial and Economic Equality Act, would require that the central bank act to "minimize and eliminate racial disparities in employment, wages, wealth, and access to affordable credit.” It would further require the Fed chair to identify in his or her semiannual testimony before Congress: (1) the existing disparities in employment, income and wealth across racial and ethnic groups and (2) how the Fed is using its authorities to reduce these disparities. Finally, the Fed’s Semiannual Monetary Policy Report would be required to include recent labor force trends with “a comparison among different demographic groups, including race, gender, and educational attainment.

With Republicans in control of the Senate, the bill is extremely unlikely to become law, at least this year. But it does reflect recent comments made by Fed Chair Jerome Powell on race and inequality over the past few months. In testimony he gave before the Senate Committee on Banking, Housing, and Urban Affairs in June, Powell noted that, "The burden of the downturn has not fallen equally on all Americans," as " job losses of African Americans, Hispanics, and women have been greater than that of other groups" and warned that "If not contained and reversed, the downturn could further widen gaps in economic well-being that the long expansion had made some progress in closing."

Other Fed officials have been more pointed in their remarks. Minneapolis Fed Chair Neel Kashkari and San Francisco Fed Chair Mary Daly both noted the role that systemic racism plays in economic inequality and condemned law enforcement overreach. Atlanta Fed Chair Raphael Bostic, meanwhile, recently pubished an open letter saying that there is a moral and economic imperative to end racism.

At the same time, the bill springs from a criticism of the Fed for not doing enough; its prime author is Sen. Elizabeth Warren (D-Mass.), a former presidential candidate who recently expressed concern that Fed policy was serving to deepen racial inequality in its response to the pandemic. Her co-authors are Sen. Kirsten Gillibrand (D-N.Y.) and Rep. Maxine Waters (D-Calif.).